CBN Governor, Cardoso Faces More Hurdles As Inflation Rises

October marked the tenth consecutive month that Nigerian inflation has increased, rising pressure on the recently appointed governor of the central bank to raise interest rates during the first meeting of the monetary policy committee.

Following the suspension of Godwin Emefiele earlier in the year, Olayemi Cardoso assumed leadership of Nigeria’s central bank in September.

Cardoso has promised to retraction the bank from the heavily criticized fiscal measures that Emefiele was pursuing, which weakened the central bank’s capacity to control inflation.

Cardoso stated that the central bank will instead play a “more limited advisory role” in aiding the government’s goal of economic expansion.

In terms of annual growth, the statistics bureau said that price increases for food and non-alcoholic beverages were the main cause of inflation in October.

Food inflation, which makes up the majority of Nigeria’s inflation basket, increased to 31.52% in October from 30.64% in September.

Since 2016, the most populous and largest economy in Africa has experienced double-digit inflation, which is eating away at savings and incomes.

Africa economist at research firm Capital Economics, David Omojomolo said:  “We are approaching almost four months since the central bank’s last policy meeting in July, a meeting which underwhelmed.”

“The central bank will need to act with aggressive hikes to maintain its credibility and bring down inflation,” he added.

At its July monetary policy meeting, the central bank decided against raising interest rates by as much as 25 basis points as had been anticipated, stating that a mild increase would have better served to stabilise inflation expectations while preserving investment.